Assume that in the Economy only two goods are produced: Computers and TVs.
Macroeconomic information for this economy is given in Table 1.
a. How much is Nominal GDP in 2008 and 2009? What is the percentage change?
b. How much is Real GDP in 2008 and 2009
Question 2 (5 marks)
The diagram below shows the demand for money and the supply of money
a. Explain why the function is downward sloping
b. What is the interpretation of writing the money demand function as
Demand for money depends on price level and the
Question 1 (5 marks)
Consider an economy that is initially in long-run equilibrium as drawn in the following graph where
LRAS is the long-run AS curve, AD 1 is the aggregate demand curve, SRAS1 is the short-run AS
curve, Y(fe) is the potential output unde